June 01, 2015

Bipartisan efforts seek fair and balanced patent overhaul bill

ABA President William C. Hubbard commended Senate Judiciary Committee Chairman Charles E. Grassley (R-Iowa) and Ranking Member Patrick J. Leahy (D-Vt.) this month for their efforts to develop patent overhaul legislation that represents a “fair and balanced response to the abusive patent enforcement practices by those who acquire and hold patents primarily to extract extortionist settlement and judgments, and not to provide products and services to the public.”

The committee approved S. 1137, the Protecting American Talent and Entrepreneurship Act of 2015 (PATENT Act), by a 16-4 vote on June 4. Hubbard, in a June 1 letter to Grassley and Leahy, noted that a number of the bill’s provisions reflect “bipartisan solutions to extremely complex and contentious issues.”

Hubbard indicated that the legislation, which improves upon versions considered during the 113th Congress, addresses the ABA’s concerns that the earlier proposals would have established separate rules of procedures in the courts applicable only in patent cases. These proposals would have overridden the congressionally established system under which the federal courts develop rules of procedure and case management for all litigation.

Hubbard said that Section 6 of the bill would provide guidance rather than an inflexible mandate to the Judicial Conference in developing rules to address discovery issues in patent cases. The section also includes an additional safety valve to authorize a district court, applying the rules developed by the Judicial Conference, to modify the requirement of the rules for good cause shown. He encouraged the sponsors to apply this guidance to pleading requirements and discovery limits as well.

Hubbard commended the bill’s authors for including in the fee-shifting section of the bill provisions that properly place the burden of proof on the prevailing party in patent cases. Before making an attorney fee award, the court must find that the position or conduct of the non-prevailing party was not objectively reasonable in law or fact, he explained. 

Hubbard also recognized the sponsors for including provisions to authorize direct enforcement actions by the Federal Trade Commission against parties who send out bad-faith demand letters alleging patent infringement in order to obtain extortionist settlements.

Following the Senate committee’s approval of S. 1137, the House Judiciary Committee approved H.R. 9, its patent overhaul legislation, on June 11 by a 24-8 vote. The House bill was amended by the committee to bring it more in line with the Senate bill in several of the areas highlighted in Hubbard’s letter.

Both bills are ready for floor action in their respective chambers, and President Obama has expressed support for enactment of bipartisan legislation designed to curtail abusive patent litigation and improve transparency in the patent system.